There are situations that can cause even a successful investment portfolio to fail. High volatility, experimental technology, and scam projects can destroy a user’s deposit in a matter of minutes if the wrong decisions are made. However, even if the account is in profit and all positions show good growth, one should not forget that there are additional, not related to the market situation, peculiarities of the crypto industry. If you do not pay attention to them, then at one moment, an investor can lose the earned income. What are the hidden risks when investing in cryptocurrency and how they can be avoided, we will talk in this article.
Using centralized exchanges and services
Centralized exchanges are participants of legal relations in their jurisdictions. In addition, they can comply with the orders of the authorities of other countries regarding users who are verified using the addresses of those countries. Some tokens can be available on an exchange for a while, but at one point they can be banned by a court of law. The exchanges themselves could suffer the same fate. Features of a centralized exchange, such as: deposits and withdrawals, P2P trading for fiat, access to participate in initial token offerings can be stopped.
There are cases when the exchange may request confirmation of the origin of the user’s funds in the account, freezing them until the verification is passed. In addition, the exchange can freeze an account for sending funds to a dubious address.
Independent storage of private keys
This category refers to the form in which the user prefers to store the private key. If you choose to store the keys on a computer or a flash drive, you need to think about the potential risk of losing access to the medium or of it failing. If using paper media for a private key, you also need to think about what kind of paper and pen you are going to use. Poor quality paper can begin to deteriorate after a few years, and the ink of a bad pen can fade. So when you decide to take out the paper to enter your wallet key, you may encounter a problem that will cause you to lose access to your digital assets forever.
There are also multisig wallets that are accessed with multiple private keys. In 2015, there was a story when five Chinese businessmen decided to use such a wallet and entered five private keys. Each businessman had one key, and no one else knew where they were stored. The story ended with one of the businessmen suddenly dying of a heart attack and the remaining investors losing access to the wallet.
This problem can be solved by duplicating the private key on additional media. If you decide to resort to paper, you need to be aware of how long you plan to keep it with you. By creating such a cold wallet, users are usually going to use it in the long term. In this case, it is worth thinking about the quality of paper and pen with which the private key will be written. What could become of them in ten years? If even a couple of characters fade over time, the access to the wallet can be lost forever.
In addition, care should be taken to ensure that relatives can access the assets in the event that the private keys are physically impossible to use.
Human memory
This is a unique risk that can make you lose out on a successful investment. This happens when an investor invests small amounts of money in a large number of startups, stocks or tokens. If an investor stops following the market regularly, there may be a chance that he or she will simply miss news about a successful investment and forget about it. To find a solution to this risk is not difficult, you can simply subscribe to the newsletter of the project or telegram chat community, where funds were invested. And in order to ensure that the news flow does not interfere, you can create a separate folder for them.
Another risk associated with a person’s memory is that of forgotten crypto gifts. Today, digital assets are quite popular and there are people who give gifts in the form of tokens, cryptocurrencies and NFTs for various holidays. In case a person is given such an item and they are not interested in cryptocurrency, the gift can easily get lost. To prevent this from happening, you need to take care of the gift properly in advance. For example, if it is a private key, you can put it in storage along with important documents or precious jewelry. In addition, there are more creative approaches – to make a gift in the form of some toy, which will constantly remind the person of himself.
Conclusion
As you can understand: investing in cryptocurrency has not only the surface risks that are commonly talked about, but also hidden ones. Therefore, before investing in digital assets, you need to think through everything in advance. But to start trading on the top sites today, we can recommend a trading assistant – a trading bot. One of the leaders in this segment is RevenueBot. The service provides the opportunity to create trading bots on the largest cryptocurrency exchanges: Binance, Bittrex, Bitfinex, Exmo and others. Creating a bot is free of charge, the service will not take commissions until the client begins to make a profit from trading the bot. With the help of deep settings of the bot, the service’s clients implement trading strategies that are problematic to experience in normal trading. We will immediately indicate: the bot does not have access to customer funds on the exchange, but trades using API keys, that is, the account will remain out of access. RevenueBot has over 35 thousand customers who earn money thanks to trading bots.
Why should I choose this service?
- Pay the commission only after making a profit.
- The bot settings open up a variety of ways to make a profit.
- Inside RevenueBot, a marketplace is implemented where customers can buy a ready-made bot so as not to bother creating their own, or sell their own if the configuration has shown efficiency. Also, the services of a mentor (an experienced customer of the service) are purchased on the marketplace, who is ready to answer the questions of newcomers. Over time, you can become a mentor yourself, getting additional profit for this.
- Regular updates of the service’s features that optimize the trading process.
- The presence of the RevenueBot referral program allows you to earn money on trading, even without resorting to trading. Attract new customers for the service and get up to 30% of the profit they receive every month (but not more than 15 USD).
This is a small list of the advantages of the service. You can continue to list the positive qualities of RevenueBot, but why do this if you can go to the official website of the service and see for yourself everything? It is highly recommended to make decisions faster, because the crypto market does not stand still, but grows at exorbitant steps. Who knows how much profit is missed by someone who does not dare to come and start trading with RevenueBot.